In the first half of this year, Volkswagen faced declining sales of its pure electric vehicles (EVs) in the Chinese market. The company sold 48,147 pure EVs, all belonging to its ID. Series. This figure represents a decrease of 19% compared to the same period last year. Meanwhile, the overall market for pure electric vehicles in China witnessed a 20% increase during the same period, reaching 2.09 million units. As a result, Volkswagen’s share of the pure electric vehicle market dropped from 3.4% to approximately 2.3%, losing more than 1 percentage point of market share.
Volkswagen offers a range of ID. Series models in China, including ID.3, ID.4, and ID.6. As Volkswagen operates through two joint ventures, SAIC-VW and FAW-VW, it produces and sells ID.4 and ID.6 under both these entities, resulting in double versions of ID.4 and ID.6. However, sales data reveals that, apart from the ID.3, the sales of Volkswagen’s other ID. series models have all experienced a decline during the first half of 2023.
Why are the sales of the VW ID. Series declining in China?
Several factors contributed to the decrease in Volkswagen’s EV sales in China. Firstly, the competition in the Chinese EV market is intense, with numerous new EVs being launched each month. Volkswagen’s lack of new EV product launches in the past year has affected its competitiveness.
Secondly, other companies, such as BYD and Tesla, have engaged in a price war by reducing the prices of their EVs, which has attracted more attention from consumers. Volkswagen, however, has been slower to respond to this price competition.
Additionally, to maintain market share amidst the competition, Volkswagen offered discounts on the prices of many internal combustion engine (ICE) products this year. This strategy, however, led some customers who originally planned to purchase Volkswagen’s EVs to opt for discounted ICE models instead.
Volkswagen is stimulating EV sales in China by cutting prices
Volkswagen addressed the declining sales of its ID.3 model in the Chinese market. Initially priced at 162,900 RMB (22,800 USD), the sales volume was unsatisfactory. To boost sales, Volkswagen lowered the price to 142,900 RMB (20,000 USD), resulting in a slight increase in sales. However, sales began to decline gradually, and by June 2023, the sales volume of ID.3 in China was only 1,819 units. To put this in perspective, the main competitor of ID.3 in China, BYD Dolphin, sold 26,408 units in June, 14.5 times higher than ID.3.
To reverse the sales trend, Volkswagen significantly changed in early July. The company further reduced the price of the ID.3 in the Chinese market, setting the starting price at 119,900 RMB (16,800 USD), a reduction of 16%. Following the price cut, dealers reported a significant increase in sales volume. We will track and report the sales changes of ID.3 in China after the end of July.
